Wall Street Journal and Crony Capitalism

by Robert Arvay, Contributing Writer

For most of us on the political right, capitalism is considered a good word. For many on the political left, the Wall Street Journal is a far right newspaper – bad thing. The truth is different. What the Wall Street Journal advocates is not capitalism, but crony capitalism, otherwise known as welfare for the rich, at the expense of the American taxpayer. The policy at issue takes the form of an immigration policy which sounds good on the surface, but which undermines our free market system. Some on the left actually agree with the immigration policy advocated by the Journal.

Senator Jeff Sessions (R) of Alabama opposes the anti-capitalist position of the Journal. He recently drew criticism from the Journal because he speaks out against the use of a certain class of visas to hire foreign technologists to work in the U.S. Actually, it is not the use of such visas that Sessions has spoken out against, but rather, the abuse of them to discriminate against Americans.

The particular class of visa that Sessions opposes is called the H-1B, and the visa is actually a good idea – but, it’s a good idea gone terribly wrong.

The intent of the H-1B program is to do what visas should do, which is to bring in productive workers who will not go on welfare, but instead become taxpayers whose jobs produce better and cheaper goods and services for the U.S.consumer. Who could be against that?

What Sessions points out, however, is a poison pill in the H-1B program. That detail undoes much of the good in the program, and replaces it with the opposite of the program’s intent. It works like this. If you are a technology worker in Foreenia (an imaginary foreign country) with skills needed in the U.S., then you can apply for an H-1B visa to come to America and work for an American company. So far, so good, but here is the poison pill: you can work only for the one company that sponsors you in the program. Once you get to America, you may discover that you are woefully underpaid by that company, overworked, and treated poorly. However, you cannot change jobs. You cannot take your visa to another company. You are stuck with the sponsor, and if you object, you can be fired and sent back to Foreenia, to be replaced by a more compliant foreign worker.

This obviously undermines the competition for American workers. Why would an American company hire one of those pesky American technologists who actually want days off, competitive wages, and to be treated with respect? Why not hire a foreigner who is in no position to complain about long hours, short pay, and disrespect? Furthermore, if your existing American workers complain, you can threaten to replace even them with hapless foreign workers who are more servile to the bosses. That tends to drive down wages.

The essence of free market capitalism is competition. Companies should compete to produce the best product at the lowest prices, while at the same time, workers compete for the best jobs. If a worker demands more money than his labor is worth, he gets fired. That is good for the market, but when the employer can lay off a productive American worker who is getting paid a competitive wage, and hire what amounts to an indentured servant at below market wages, that is very bad for the market system.

If the American government brought in foreign companies which were not subject to competition, and used them to undermine the profitability of American corporations, I suspect that the Wall Street Journal would take a dim view of that. I would, and so would you.

That’s because we are fair.

One thought on “Wall Street Journal and Crony Capitalism

  1. Excellent article, Robert! Let me add my own perspective on this matter: I had a colleague at a publishing house who was the senior editor of the Japanese edition of a magazine. The company decided to cut back after the market crash in 2000 and she almost lost her job. If she had, she would have forced her to return to Japan. She was so upset … She put in tremendous effort to get her H-1B visa and, as your article points out, workers who come here with the H-1B may find a volatile job market, poor working conditions, etc, which necessitate a change.

Leave a Reply to Clio Cancel reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s